Do real estate search sites miss accuracy mark?

For millions of serious and not-so-serious homebuyers, the first stops in the house hunt are likely the Zillows and Trulias. Consumers are drawn to their simple and intuitive designs, and more importantly, the landslide of listing information they can gather after a few searches.

What consumers can’t see is how the information is collected, culled and presented — a proprietary process that could lead to inaccuracies. Real estate agents and brokers in San Diego County and beyond have their horror stories: incorrect bed and bath counts, duplicates with differing prices and homes listed as active when they have already sold. What’s the likely implication of this for consumers? Misinformed buying decisions.

“It’s a massive, massive amount of information,” said Jeffrey Douglass, a San Diego real estate broker. “It gets to be a kind of nightmare from the perspectives of Zillow and Trulia.”

“What got them started,” Douglass added, “(consumers) wanted to know what their neighbors paid and what the person down the street paid.”

Representatives from those popular real-estate search sites say their systems, which draw from multiple sources, aren’t perfect. But it appears Zillow and Trulia are trying to clean up their data act and appease the industry. Zillow agreed last month to prominently feature listings from Howard Hanna Real Estate Services, one of the largest real estate companies in the country, in exchange for one clean data feed from the brokerage.

But not all real estate pros are willing to work with the bigwig advertising sites. San Diego-based ARG Abbott Realty Group in January cut off its listing access to Zillow and Trulia, a first for a brokerage in the county.

Not long after, Sandicor, the local Multiple Listing Service, announced plans to control and limit what it sends to syndicators, whose data eventually get picked up and used by the Zillows and Trulias.

To understand the debate and how it can affect the house-shopping experience, here’s an introduction to real estate syndication.

How does it work?

It all starts with someone wanting to sell a home. The seller works with a real estate agent who lists the home on the market.

The agent enters the home’s information — from square footage to asking price — into the Multiple Listing Service, or MLS, a members-only network that contains listing details.

Real estate professionals typically then are able to send the listing information to third-party sites. This move, which is voluntary, is meant to attract more interested buyers to a property so it gets sold quicker.

That’s where the Zillows and Trulias come in, right? Not yet.

The housing data are actually sent to real estate syndicators, who collect up to hundreds of data feeds from all over the country. They make the data uniform to distribute to several places including Zillow and Trulia.

It’s also important to note that the Zillows and Trulias also draw from various sources. They include data providers, brokerages, individual agents and MLSs.

So the results you see on those sites represent a lot of data changing hands and being cleaned up in ways that are not disclosed to the public.

Saul Klein, senior vice president of major syndicator Point2, calls the method it uses to “normalize” the data its “secret sauce.” This is the typical response from real estate services, including syndicators and third-party sites. Most, if not all, won’t disclose the methods they use to clean up, choose and send out data.

What do agents get in return for syndication? Widespread exposure on popular platforms. Zillow recently reported 31.3 million unique users visited its sites and mobile apps in February. Trulia says it gets 20 million unique users each month.

What’s the fuss?

One day in February, San Diego real estate broker Kris Berg carried out an experiment.

Berg, who has an issue with syndication, wanted to see how one of the popular real estate search site’s listings compared to that of the local MLS. She analyzed 92131, the Scripps Ranch ZIP code.

Here’s a sampling of her findings from 220-plus search results:

• 54 were not for sale.

• 46 were condos, although Berg limited her search to houses.

• 24 had sold. One dated back more than a year.

• 17 were contingent.

• 10 were in escrow.

• 8 were expired, canceled or withdrawn.

“It was a bit of a mess,” Berg said.

How do such inaccuracies happen?

As discussed earlier, there’s lots of data going around through multiple sources. Different parties who want to promote listings may be entering different information in different places at different times. Those parties include brokers and agents.

In the midst of all that sharing, sometimes data aren’t updated.

“If it’s not accurate and is dated, then it’s not good for the consumer,” Klein said. “The problem for the consumer is there are many sources of information.”

One can’t-miss point in this discussion is the importance of everyone updating their data feeds. ListHub, the country’s largest real estate syndicator, says its feed is updated four times a day. It sends daily reminders to “publishers,” such as Zillow and Trulia, to update on their end. Point 2 asks that partners update at least every 24 hours. The point is, everyone must be diligent. If interested parties aren’t updating, they could be disseminating bad or misleading data.

So if Trulia and Zillow get multiple copies of one listing, how do they decide which listing to use?

Trulia spokesman Ken Shuman said they use an in-house algorithm that he declined to go into because it’s proprietary. Zillow, which pulls from more than 1,000 sources, says it gives “priority to MLS and broker feeds over other sources,” said spokeswoman Cynthia Nowak.

What else can affect the accuracy of listings?

Amateur syndicators can, said Gregg Larson, a real estate information-technology consultant based in Scottsdale, Ariz., who has a national presence.

Larson means companies whose main business is to offer advertising to agents and brokers, from business cards to virtual home tours. As a way to generate more money, some have gone into the syndication business, offering to distribute clients’ information to various sites as a bonus.

“The problem is, they don’t have the infrastructure, the routing, the distribution technology,” Larson said. “They end up sending stuff out and not end up cleaning it up.”

Or updating it.

Is inventory overstated?

Real estate brokers and agents argue third-party sites such as Zillow and Trulia are overstating inventory, which could confuse and derail consumers.

Berg, the San Diego broker who did the listing experiment, said this can be seen in the inclusion of pre-foreclosures, which aren’t for sale.

Zillow and Trulia both include homes of people who have received notices of default, the first formal step in the foreclosure process. Not everyone who gets one of these notices will end up in foreclosure. The percentage of California homeowners who start the foreclosure process and avert foreclosure is roughly 57 percent, based on data for the past five years from RealtyTrac.

Berg found about 45 such examples in her search results for the ZIP code she tested in her experiment.

“It’s absolutely a bait-and-switch,” Berg said. “The owner may work out a loan modification, do a short sale, or be foreclosed upon.”

Both Zillow and Trulia stand by their use of pre-foreclosure data.

Zillow, which channels data from foreclosure.com, said putting the information out there could facilitate future short-sale deals between troubled homeowners and future buyers.

“At the end of the day, with the discussion on syndication, we’re trying to help get consumers into homes they want to live in,” said Greg Schwartz, chief revenue officer at Zillow.

Trulia’s Shuman said pre-foreclosure information gives consumers the full picture of what’s going on in neighborhood markets.

“We believe it should be front and center, and part of your comprehensive search,” he added.

Is data quality improving?

Real estate search sites emerged in the mid-2000s and have grown exponentially.

“The Zillows and Trulias of the world exist because our industry did a poor job with the listings ourselves,” said Jeffrey Douglass, a local broker who’s been vocal in the syndication debate. “So the consumers go somewhere else.”

The real estate search sites have lured millions of unique users with their user-friendly apps and a wide range of tools meant to make the home-shopping experience easier — and even fun. Those in the industry say the MLS networks have fallen flat in this area, so naturally consumers have strayed.

Many brokerages and MLSs have surrendered to search sites’ vast market presence and continue to work with them, acknowledging they are getting widespread exposure.

Howard Hanna talks Zillow deal

Some major brokerages such as Howard Hanna in the Northeast are even making deals with them.

Company President Howard “Hoby” Hanna said this in a YouTube video about the recent partnership with Zillow:

“Zillow, we will partner with you. We will send you a clean set of our data. We’ll make sure it’s fully enhanced, but we want the following in return: Number one, we want integrity of data. We want to work with you to make sure the data feed that you get is accurate, is in real time, that no longer will Zillow per our agreement take data from other places and other sources.”

On the other extreme, one San Diego brokerage is not playing ball with either Zillow or Trulia.

“This is about the long-term survival for all brokers,” Abbott said. “You cannot keep giving away what amounts to be your future business.”

And while there may be continued clash between industry pros and third-party sites, it appears everyone is attempting to make data more uniform and accurate for those who are seriously and not-so seriously interested in buying homes.

“Yes, we have inaccuracies, but far fewer than five years ago,” said Klein, of Point2. “Syndication is an evolution.”